Sound financial management clearly wasn’t a concern to any party
involved in the recent contract negotiations in Chicago Public Schools.
They were warned that new labor expenses might result in a credit downgrade for the financially-strapped school district, and they chose to ignore it.
Now it has comes to pass. The credit rating agency Moody’s has downgraded the school district for the second time in one quarter.
Moody’s wrote:
“The negative outlook reflects the school district's budgeted depletion of reserves to fund ongoing operations in fiscal 2013; the moderate additional unbudgeted salary costs of labor contract negotiations, which have not yet been ratified by CTU; an estimated $1 billion budget deficit for fiscal 2014; and the sizable increase in pension contributions following a three-year relief period. Significant budget adjustments will be necessary, but the demonstrated power of collective bargaining suggests that future budget controls may be difficult for the district to implement.”
Chalk one up for the Chicago Teachers Union. It’s insistence on pressing for higher wages at a time when the district could not afford it has pushed CPS even closer to financial collapse. And Mayor Rahm Emanuel doesn’t deserve a pass. He didn’t have the guts to stand up to the union, and now schoolchildren and taxpayers will pay.
The downgrade will, of course, make it more expensive for the school district to borrow money, complicating an already messy financial situation.
Read more: http://townhall.com/columnists/kyleolson/2012/09/29/new_contract_earns_chicago_schools_2nd_credit_downgrade__in_one_quarter
They were warned that new labor expenses might result in a credit downgrade for the financially-strapped school district, and they chose to ignore it.
Now it has comes to pass. The credit rating agency Moody’s has downgraded the school district for the second time in one quarter.
Moody’s wrote:
“The negative outlook reflects the school district's budgeted depletion of reserves to fund ongoing operations in fiscal 2013; the moderate additional unbudgeted salary costs of labor contract negotiations, which have not yet been ratified by CTU; an estimated $1 billion budget deficit for fiscal 2014; and the sizable increase in pension contributions following a three-year relief period. Significant budget adjustments will be necessary, but the demonstrated power of collective bargaining suggests that future budget controls may be difficult for the district to implement.”
Chalk one up for the Chicago Teachers Union. It’s insistence on pressing for higher wages at a time when the district could not afford it has pushed CPS even closer to financial collapse. And Mayor Rahm Emanuel doesn’t deserve a pass. He didn’t have the guts to stand up to the union, and now schoolchildren and taxpayers will pay.
The downgrade will, of course, make it more expensive for the school district to borrow money, complicating an already messy financial situation.
Read more: http://townhall.com/columnists/kyleolson/2012/09/29/new_contract_earns_chicago_schools_2nd_credit_downgrade__in_one_quarter
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